Correlation Between Fortum Oyj and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Outokumpu Oyj at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fortum Oyj and Outokumpu Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Outokumpu Oyj, you can compare the effects of market volatilities on Fortum Oyj and Outokumpu Oyj and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fortum Oyj with a short position of Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Outokumpu Oyj.
Diversification Opportunities for Fortum Oyj and Outokumpu Oyj
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortum and Outokumpu is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj and Fortum Oyj is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fortum Oyj are associated (or correlated) with Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Outokumpu Oyj
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 0.85 times more return on investment than Outokumpu Oyj. However, Fortum Oyj is 1.18 times less risky than Outokumpu Oyj. It trades about 0.02 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about -0.04 per unit of risk. If you would invest 1,185 in Fortum Oyj on October 23, 2024 and sell it today you would earn a total of 166.00 from holding Fortum Oyj or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Outokumpu Oyj
Performance |
| Timeline |
| Fortum Oyj |
| Outokumpu Oyj |
Fortum Oyj and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Outokumpu Oyj
The main advantage of trading using opposite Fortum Oyj and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Outokumpu Oyj can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Fortum Oyj vs. Detection Technology OY | Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. Alma Media Oyj | Fortum Oyj vs. SSH Communications Security |
| Outokumpu Oyj vs. Nordea Bank Abp | Outokumpu Oyj vs. Fortum Oyj | Outokumpu Oyj vs. Wartsila Oyj Abp | Outokumpu Oyj vs. Sampo Oyj A |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |